Is the Price for Apple's HomePod Justified? (AAPL, AMZN)

At its developer conference yesterday, Apple Inc. (AAPL) released the HomePod, a product for the smart assistant market. A key sticking point after Apple's unveiling was the speaker's retail price. The HomePod, which will be available in December, will sell for $349.

Other players in the smart assistant market have priced their products at much lower price points. For example, Amazon.com, Inc.'s (AMZN) Echo series of speakers have prices that range from a minimum of $50 to a maximum of $180. Alphabet Inc. (GOOG) subsidiary Google's speakers sell for $129. Apple has justified the steep price by claiming that its device is actually two products rolled into one – a state-of-the-art speaker and a smart assistant that can answer user queries. (See also: Apple to Launch Smart Speaker This Month: Bloomberg.)

To be sure, a read-through of the speaker's sound technology looks impressive. During an interview with Bloomberg Television yesterday, Apple CEO Tim Cook reinforced the speaker's acoustic capabilities. "We've tried to build a breakthrough speaker first," he said, adding that the HomePod could reinvent the portable player area in the home.

But the Cupertino, California-based company still has some catching up to do in making Siri as smart as Google Assistant or even Amazon's Alexa. According to a study by digital marketing agency Stone Temple Consulting, Google Assistant is the best smart assistant in town. It answered user queries 69 percent of the time and was correct 91 percent of the time. Microsoft Corporation's (MSFT​) smart assistant Cortana was in second place with a response rate of 56 percent and 82 percent correct responses. Apple's Siri was third with a 67 percent rate of answering questions correctly from the 22 percent of all user questions that it answered. Amazon's Alexa answered 21 percent of all user queries with an accuracy of 87 percent. (See also: Amazon's Alexa Will Approach 71% of the Smart Speaker Market: eMarketer.)

But the HomePod might still beat competitors, especially as Siri gains traction in homes and with users. Apple has already integrated the smart speaker with its Apple HomeKit. An IDC Insights analyst stated that "intelligent assistants will get smarter the more they are used and via their ability to integrate information used across multiple devices." In other words, your iPhone's Siri could help the HomePod become more intelligent. (See also: Pacific Crest: Sell Apple, Buy Alphabet.)